It is about why the value of rupee in India is decreasing and how it can be stopped, is it harmful or not.

1. Why is Indian Rupee falling?
● Everyone is aware about the fact that value of Indian rupee is falling,
But why???
● Who decides the rate??

2. There are three main types of exchange rates:
1.Fixed exchange rate system:
Fixed exchange rate is determined by the government of the country or central bank and
is not dependent on market forces.
2. Flexible/floating exchange rate system:
It is dependent on the market forces of supply and demand.There is no intervention of
the central banks or the government in the floating exchange rate system.
3. Managed floating rate system:
Managed floating exchange rate system is the combination of the fixed (managed) and
floating exchange rate systems. Under this system the central banks intervene or
participate in the purchase or selling of the foreign currencies.

3. These are the factors affecting floating exchange rate:
1. Market forces i.e. demand and supply.
2. That means if foreign companies like any other countries product then they buy
that country currency and then purchase that product.
3. Unemployment rate.
4. Manufacturing different products.
5. Value of products.

5. In 1947 1$=1 Rupee
Then why rupee decreased?
1. Development of India for first 5 years.
2. For that India had taken loans from so many countries.
3. And then India has no money to return that loan.
4. And hence India devalueted rupees.
5. And then Indo Pak Indo China war started our country had to suffer heavy losses
again.
6. The country needed foreign investment to boost the economy.
7. And foreign investment would've come only if there were incentives, such as cheap
products for investing in the country .
8. Because of this reason government changed the rate again.
9. As 1 $ = 7 Rs

6. 1. When a government reduces the value of a currency on its own , for any reason , by
increasing the supply it is known as Devaluation.
2. When the value of currency changes due to external factors the its called as
depreciation.
3. In 1973 , there was a huge oil crisis in the world because of this the oil , that India used
to import from other countries got expensive.
4. Driving the value of Indian currency further down After this , the Prime Minister of the
country Indira Gandhi was assassinated
5. And the confidence of the foreigners on the Indian economy shattered
6. After this , the biggest shock to the Indian economy was in 1991 .A heavy fiscal deficit
was seen
7. The country went through Economic Liberalisation
8. The changes in the demand and supply in the market led to a change in the value of the
rupee .
9. Rupee's value kept getting devalued

8. What if 1$ = 1 Rupee?
1. Vacation abroad
2. Import prices would be less
But in reality,
1. It would also mean that no foreign investments will come to India or negligible
2. Because companies invest in India due to cheap labour
3. The service sector from other countries about provide 32% of employment to India
4. Hence all these companies will leave India and then there will be so much
unemployment
5. What is beneficial for country a strong rupee or a weak?
6. Export oriented countries keep their currency weak
7. While import oriented countries keep it strong

9. Development:
● India should reduce its import dependency
(mainly oil)
● Industries in India should be promoted other than
It industries
● Healthcare and Insurance Sector
● Renewable Energy Sector
● Tourism
● Real Estate Sector
● Fast Moving Consumer-Goods Sector (FMCG) …
● Automobile Sector.